Rising occupancy and construction lags underscore need for new senior living
LOS ANGELES: Increasing occupancy in senior housing, coupled with continued construction lags, underscores the need for sustained investment in new development, according to the National Investment Center for Seniors Housing & Care.
Senior housing occupancy grew 2.2 percentage points for the year, ending 2025 at 89.1% — an increase of 0.4 percentage points (88.7%) from the third quarter, according to the 2025 fourth-quarter NIC MAP Market Fundamentals Data report, released Thursday. This growth marks the 18th consecutive quarter of occupancy rate increases in the senior living sector.
Independent living occupancy exceeded 90% in the fourth quarter, whereas assisted living occupancy was 87.7%, according to the data. Active adult occupancy reached almost 92% in the fourth quarter.
Occupied senior housing units (independent living and assisted living, including memory care) increased from 630,000 in the third quarter to almost 635,000 in the fourth quarter. The number of occupied units in the 31 primary markets followed by NIC MAP increased by almost 20,000 in 2025 overall, a more than 3% gain compared with 2024.
At the same time, inventory growth in the fourth quarter (0.6%) was below 1% for the third consecutive quarter, with fewer than 1,900 new units opening.
“A 200-basis-point gain in one calendar year is a solid rate of growth that shows no signs of slowing,” NIC MAP CEO Arick Morton said in a statement. “Absent new supply entering the market, it’s likely that many markets will begin to register all-time highs in the near- and medium-term.”
In early 2024, NIC MAP data indicated a need for 156,000 additional senior housing units by 2025. At the beginning of 2025, Morton told McKnight’s Senior Living that development rates were meeting only 25% of the necessary pace to sustain demand. Inventory issues are expected to worsen, as NIC MAP data indicated a need for 549,000 additional senior living units by 2028 and 806,000 units by 2030.
Demand will continue to outstrip supply in 2026, however, Morton said.
Solving the development equation “will be a significant challenge, but for those who can master it, incredible opportunity awaits,” he said.
Beyond private investment-related efforts, Morton said that “[i]f the industry doesn’t build enough supply and rate growth accelerates significantly, that could invite regulatory scrutiny.” It’s one area that NIC MAP is keeping an eye on at the federal level, he said.
Seven markets in NIC MAP’s 31 primary markets reported occupancy rates above 90% in the fourth quarter, up from five in the third quarter. In three of those markets — Boston (93.1%), San Francisco (91.9%) and Baltimore (91.9%) — senior living communities were almost fully occupied. Only five markets posted occupancy below 87%, including Miami (85.4%), Atlanta, (85.5%) and San Jose (86.1%).
Middle-income older adults — those who don’t qualify for subsidized housing and services but lack the resources to afford private-pay senior living — are most affected by the current supply-demand dynamics, NIC noted. Increasing operating and development costs are leading to more new communities serving higher-income residents, “underscoring the growing need for viable middle-market solutions.”
“The rising occupancies and low inventory growth is going to lead to some real-life challenges for older adults and their families in certain markets,” Lisa McCracken, NIC head of research and analytics, said in a statement. “The reality is if there are limited options available, others may step in to provide alternatives if the senior housing supply is constrained.”